Guardian media firm makes £186m, but pays only £200,000 tax

The events and magazines company Top Right Group ran up a corporation tax bill of just £200,000 despite making a pre-tax profit of £186.2m last year.

Top Right, owned by Guardian Media Group and Apax Partners, landed a huge one-off windfall of £166.1m after selling its motoring research arm, CAP. Its chief financial officer, Mandy Gradden, told The Independent the profits on the sale were "exempt from tax under the substantial shareholding exemption which is available to every company in the UK".

Top Right, which owns the Cannes Lions advertising festival and magazine brands Broadcast and Retail Week, cut its tax bill further by bringing forward tax losses from previous years.

GMG, owner of The Guardian newspaper, and private-equity firm Apax, bought Top Right, formerly known as Emap, for £1.1bn in 2008, and own it through parent companies in the Cayman Islands and Luxembourg. Ms Gradden said the offshore structure did not affect its tax bill.

In a sign of how Top Right needs to cut its debt load, the group used much of the CAP proceeds to make a "pre-payment" of £110m to lenders in January this year to provide extra "headroom" on bank covenants.

Ms Gradden was bullish about the future after like-for-like sales rose by 7 per cent to £251.7m last year. Even the magazines arm returned to growth as investment in digital paid off. She said Top Right is "gunning for double-digit growth in 2013".

However, operating profits dropped to £23.6m from £59.6m as the chief executive, Duncan Painter, wrote off £41.1m in impairment costs and invested in the business which he split the group into three divisions. He claimed 2012 was a year of "transformation" and profits should grow this year.